Investors for Paris Compliance (I4PC) launched a complaint against the Ontario Securities Commission and the Autorité des marchés financiers of Québec on Tuesday, asserting that Canada’s big five banks’ sustainable investing disclosures are misleading to shareholders. 

The complaint called out BMO, Scotiabank, CIBC, TD and RBC for providing possibly misleading environmental, social and governance (ESG) disclosures. These banks include “sustainable finance” as a “major part” of their plans to reach net zero carbon emissions in their investments by 2050. However, the complaint asserted that their ESG-related disclosures do not contain any quantitative standards or measurements of outcomes connected to sustainable finance. Additionally, the complaint noted that the Ontario Securities Act and the Quebec Securities Act apply to ESG reports and prohibit misleading or untrue statements, including the omission of relevant facts.

The complaint also accused these banks of possible “greenwashing.” This term refers to disclosures or marketing practices that intentionally or inadvertently mislead investors about ESG-related aspects of an investment. Lastly, the complaint asked for an investigation into these sustainable finance disclosures and a requirement for the banks to produce better disclosures or disclose the limitations in reports.

In response to the complaint, I4PC Executive Director Matt Price stated:

Securities regulators in Canada have expressed a general concern with greenwashing, and now investors need them to follow through with specific action to protect bank securities holders. Meanwhile, we need the banks to get serious about shifting finance out of fossil fuels and into ventures that reduce emissions.

The announcement of the complaint also cited to a BloombergNEF report, which found that these banks have “some of the worst ratios of low-carbon to fossil-fuel financing in the world.”

ESG investment criteria have been subject to several recent controversies. In 2023, US President Joe Biden vetoed federal legislation that would have overturned a Department of Labor rule that allows retirement fund fiduciaries to consider ESG factors.